March 13, 2020
Finally! ebooks become exempt from tax
by Nikki Griffiths
It’s budget time! On Wednesday 11thMarch, Chancellor Rishi Sunak made the annual budget statement, outlining the state of the UK economy and the government’s proposals for changes to taxation. Highlights included £12 billion promised for temporary, timely and targeted measures during the coronavirus outbreak, £27 billion between now and 2025 to be spent on improving vital transport routes and £12.2 billion to go towards building more affordable homes. And guess what folks, it’s good news for book lovers! Finally, the tax on ebooks is being removed
Physical books have long been exempt from tax in the UK, the basic idea being that anything considered ‘luxury’ is subject to a 20% valued added taxed (VAT), whereas anything basic is not. It was widely decided taxing books would effectively be a tax on knowledge, and therefore not acceptable. But somehow ebooks slipped through the cracks, and have always been subject to 20% VAT.
EU legislation enforced this illogical tax, but as of 2018, as we wrote about at the time, an about-turn was made, allowing EU member states to reduce or do away with VAT on digital publications. Two years later, after lobbying by various MPs and campaigning by action group Axe the Reading Tax, finally the UK has decided to banish tax not only on ebooks but on all digital newspapers and journals. The announcement comes shortly after a letter signed by 700 authors was delivered to The Sunday Times by authors including Stephen Fry, EL James, Val McDermid and Cressida Cowell, urging the then chancellor, Sajid Javid, to remove the “unfair” 20% VAT on ebooks and audiobooks, which discourages children from reading.
Hurrah! Reading tax scrapped in budget just weeks after 700 authors signed letter @thesundaytimes to dump VAT on children’s ebooks Letter @PublishersAssoc @Konnie_Huq @MichaelRosenYes https://t.co/XbAsOxnQuu
— Sian Griffiths (@SianGriffiths6) March 12, 2020
Axe the Reading Tax highlight groups who will particularly benefit from the removal of the tax, including the disabled, for example those with sight issues or dyslexia; young readers (according to research from the National Literacy Trust, over 45% of children prefer to read on a digital device); universities and libraries, and businesses. According to a Publishers Association report from 2018, axing VAT on digital publications could save UK consumers up to £210 million, and universities, libraries, government departments and the NHS could save up to £50-55 million a year. The Guardian’s Jim Waterson gives an example of The Times newspaper, saying as it has a subscription price of £312 a year, with over 300,000 online-only subscribers, it could increase revenue by tens of millions of pounds.
We are thrilled that VAT will be removed from e-publications following the new Budget. This will mark an end to illogically taxing people who need or prefer to read digitally 1/2
— Axe the Reading Tax (@AxeReadingTax) March 11, 2020
Stephen Lotinga, Chief Executive of The Publishers Association said, as reported by The Bookseller:
“It’s fantastic that the Chancellor has acknowledged the value of reading.
“The decision to axe the reading tax will bring an end to the illogical and unfair tax on those who need or prefer to read digitally and should contribute to an increase in literacy in the UK.”
However, the BBC reports audiobooks will still be taxed. Sarah Lambert, head of social change Royal National Institute of Blind People told them:
“Today’s change recognises the unfairness of taxing some alternative formats and will help widen access for blind and partially sighted people who use e-Readers.
“However, for many people living with sight loss, audiobooks are their preferred format and allow them to enjoy their favourite titles in the same way as everyone else. It’s not right that they will continue to be charged 20% more for books and we urge the government to make sure that audiobooks are included in the exemption.”
This is a big win for books, but not a complete one. Are audiobooks not books too? Discrimination! Our aural companions: we will defend and fight for you until the end!
Nikki Griffiths is the managing director of Melville House UK.